Inflation Up 5.6% in 7M07

According to the State Statistics Committee, the inflation rate increased 5.6% in 7M07 (13.5% yoy). The main growth drivers were food-products where prices increased 10.9% yoy.  The most noticeable price increases occurred in eggs, meat and food oils. Our year-end inflation forecast is 10.5%. The PPI index increased 1.7% in July (12.9% in 7M07 versus 6.3% in 7M06), driven mainly by oil refining and metal products (12.5% and 17.5% YTD respectively), connected with the increase in world oil and steel prices. We will be revising our PPI forecast shortly.